from bloomberg world headquarters in new york, here is what we are watching. morgan stanley joining other top u.s. banks in being expectations for fixed income trading revenue. we break down those results. the countdown is on to tonight's final presidential debate. we had live to las vegas to discuss the latest poll numbers. hear from creditable aleman on how he recruits the best talent around -- from christopher aleman on how he recruits the best talent from around the world. >> a mixed picture, and you can see the nasdaq heading slightly lower. the s&p 500 and the dow are holding up better. we've got more energy stocks, more financial stocks of the big bank variety in the s&p and the dow.

that is what is driving the trade we are seeing. take a look at the imap for a better illustration of what is going on. we have a pretty even division between red and green, but energy and financials are heavily weighted in the s&p and those are the two best-performing groups and that is what is keeping the s&p afloat versus something like the nasdaq. banks,eply into the interesting trait that we've got because if you look at some of the big cap banks like j.p. morgan and goldman sachs, they usually benefit from higher bond yields. bond yields have turned lower, but these guys are still up. morgan stanley is only up half a percent despite the fact that it reported a 57% increase in third-quarter profits and fixed income trading almost tripling what analysts had been protecting. piece that weer are watching. up prices taking a big leg

after the weekly inventory report showed an unexpected drop down inventories that was quite a large one, more than 5 million barrels. that is what we saw the big surge in oil prices. they were already higher after saudi arabia said non-opec countries may be willing to freeze oil production as well. it is not just oil prices that are gaining. we've got some of the other types of commodities, we've got zinc, lead, 10, all gaining and inventories of these various metals dwindling as well. 10 has fallen to levels not seen has fallen to tin levels not seen in 12 years. speaking of commodities, let's take a look at steelmaker stocks. steel dynamics will be kicking up the earnings reporting season after we close, today. it also announced a $450 million buyback. u.s. steel gaining even more,

more than 6% and allegheny participating in that rally as well. david: let's check in on the bloomberg first word news with mark crumpton. if donald trump is going to win the election, he will need a historic comeback according to top analysts. prompted aite video series of women to come over and saying that donald trump had made unwanted sexual advances. donald trump support amongst men and the less educated has gotten weaker. secretary clinton and mr. trump square off tonight in the third and final presidential debate. fox news will moderate the debate in las vegas. topics will focus on immigration, the economy and the supreme court. onwill also ask questions fitness to be president.

with all the respect will host special predebate coverage -- with all due respect will host special predebate coverage. -- travelers will get refunds when their bags arrive late and there would have to be more .ransparent -- transparency they are one lovering group says the regulations would be bad for passengers and the economy. the president of the international olympic committee wants to stage some events for the 2020 tokyo olympics in northeastern japan, the region hit by the 2011 earthquake, tsunami and nuclear disaster. they made the proposal today in a meeting with the japanese prime minister. he said holding some baseball and softball games in the region is one option. global news 24 hours a day powered by more than 2600 journalists and analysts.

the fed is set to release the latest iteration of its so-called beige book at 2:00, today. favorite -- summarizes economic reports in the u.s. it is expected to get more attention than usual. here to talk more about what to expect is the u.s. income -- fixed income portfolio manager for schroders. mike mckee joins us as well. let me start by getting your forecast, your sense of when the fed may raise rates. i am also curious what you are telling your clients about the curve. expectationsrket and our expectations are up for a december rate hike. it would take an extraordinary -- it would take an extraordinary election result to change that.

not behind the curve, but certainly the market is ready for a hike and this is the time to do it. i will remind you that the last time the fed hiked, court pc -- -- unemployment rate is lower, so if there is a time, it is now. david: inflation very much what the fed is looking at, by all accounts. >> it is inflation, these days and it is picking up a lot. we are seeing oil prices rise and that will push up inflation, but to the average person, inflation separates out between core and volatile energy prices. higher, some going of this point they have a justification to raise rates. so muche have heard from that policymakers, recently. sam fisher, recently, janet yellen before that. what is your take away from what they are saying? is it easy to find -- with what

they are saying? >> there is a shift in sentiment, both through the fed and through global central banks where they are realizing that monetary policy has reached its limits and while they are not eager to remove accommodation and the fed will move out accommodation at a glacial pace, maybe there needs to be a shift toward fiscal policy or maybe it is the fact that slight yield curves are benefiting everybody and taking rates that down the way they have may have caused a competent setback in businesses in terms of consumers where if central bankers of telling you the economy is so badly need to have this much accommodation, maybe we should retrench and maybe that is part of what we are seeing on the business side of rings. i think there is a recognition of that, so we are starting to see central bankers say we want inflation, we want to keep policy easy, but maybe the costs are starting to outweigh the

benefits of going further. david: it is becoming something of a mantra, going back to the president's news conference come yesterday. it needs to be more than punt -- monetary policy. it doesn't have to be the only game in town. hillary clinton and donald trump both proposing more fiscal policy. the question is, how do they pay for it and in his case, he does not and in her case, she does, but how did she get there? but monetaryhere, policy remains it. david: looking at the yield curve, are you most interested in the shallow end of that? >> if we do she -- do see the shift i was mentioning, and see a move toward letting inflation run hot, than what we should start to see is a repricing term in premium which tends to be collated globally, and 200 basis

points. if that is the case, we should expect steeper curves. looking at the backend, that is a point were you might want to consider going under rated at times. i could see steeper curves playing out. david: was you know about the degree to which that that is paying attention to what is going on, elsewhere? sam fisher giving a nod to negative interest rates in europe and japan. this point in time, how much does the fed care about what is going on is to mark >> they are discussing a lot of what is going on, there is nothing decisive in their final decision. they care about the dollar, but it has sort of become -- had little volatility, but not very much. it is staying in a range. sam fisher to talk about the impact of the reach for yield on u.s. yields that we are seeing because there is nothing

overseas and in many cases, they have gone negative and that pushes down on our long and and makes it harder for our banks to make money and a an effect on the u.s. economy. they take all those things into account, but right now they are looking at the u.s. economy, at growth, at jobs and at the election and using that to make the decision. david: that brings up the degree to which you look for yield elsewhere, is there a place that looks attractive? -- howh this election much is this election weighing on the market? >> there are opportunities in emerging market sovereign's. developed markets and developed governments are moving toward populist policies, you are seeing certain emerging markets move to more pragmatic and centrist policies which is a typical -- which is atypical. i think there are some

opportunities. as far as the election question is concerned, i think the market like certainty. it looks like hillary clinton who is by and large an extension of the obama presidency is leading in the polls, i think if she was to get in with a republican congress and you are seeing more of the same. i think the market will embrace that as a continuation of what they know and can men -- can make reasonable -- reasonable expectations of. david: thank you both. from the, we will hear chief financial officer of the second largest american pension fund. he addresses whether private equity can still produce big returns. ♪

david: this is bloomberg markets. america's second largest public pension fund reduce returns on investment. we caught up with the cio, christopher ailman and he described the challenges that the funds face. christopher: it has to be returned focused first. it is a profit-sharing arrangement, so we have to have rockets to be able to share in it. we are seeing returns come down. not surprised because we think you'll see returns in a lot of asset classes continue to compress. we still believe in the process and think that they can add value over what -- what we could get over other investments. heard people take -- people like david bruton side talk about the secular change in the returns of private equity,

not 20% or more, but down into the middle teens. what are your expectations for private equity, going forward, numbers wise? christopher: we look at it as a spread over public markets. we expect about 300 basis points over that net of all those costs and i think that is a reflection if you look out over the last 20 years, you will see the fact that the industry went from very small with a small amount of capital and those outside 20% returns to very large capital and it is now a full industry and we are not surprised there has been a compression of those returns. more transactions are going to auction, they are not being negotiated. >> you have been vocal about this notion of sort of getting what you pay for from private equity managers and other investors that you work with. describe your relationship with them right now, what are the

things you can do to ensure you are getting what you need? christopher: what is critical, and i have tried to be vocal in the industry, the limit partner advisory committees, it needs to be stronger. there needs to be an individual limited partner identified as the lead limited partner said they can hold those meetings. just to talk about the partnership, we are not trying to run the portfolio company, we are just trying to talk about the health of the partnership. those needs -- those need to be standard at every limiter partner so they can talk about the audit, the quality of the partnership and following the document. we have gotten a lot of , a lotsm as an industry of negative press about it and the fcc, we are glad they are looking in and looking at these partnerships. we think that limiter partner

advisory can be a strong force in managing and overseeing that partnership structure. >> are you hearing other limited partner pensions and endowments express the same concerns? is it moving in the right direction? christopher: i have been hearing these kinds of concerns and i think the industry has been moving in a better direction for a while. think whether we talked to the canadians, the australians, people from the far east, the limiter partners are all kind of in agreement. we want aestors, healthy partnership that follows the partnership document and achieves results over the long-term. while different partners have different issues they care about, as a group, they'll care about getting a return for what they are paying for. >> in terms of recruiting your own talent, one of the things

that has been talked about a lot, especially for public pensions, is that you are not armed necessarily all the time to pay for the best talent, to really be a good counterweight to a lot of the general partners and private equity firms. how do you compensate for that? the bottom line is, it is our capital. we have the choice to vote with that capital, to invest or not. while gps may have more lawyers and they have big degrees, we are the ones that really get to say to them whether we will invest in the fund, and we are tough negotiators. i think the balance of power is certainly in flow with the marketplace. when the result -- not a lot of capital available like we saw in 2008, then gp listen more to lps. when there is more capital in the market, it is natural to take a stronger position.

the key for us as far as attaining talent in our case, it has to do with lifestyle balance. i've got people who like the fact that they can work hard, work in a interesting industry but also have a life on the other side and they go through our private equity funds. that was cio of callister speaking with bloomberg. the final u.s. presidential debate takes place tonight. trump and hillary clinton face-off of the final time before the election. this is bloomberg. ♪

david: you are watching bloomberg markets. in the ring in las vegas, it is donald trump v hillary clinton. the presidential nominees take the stage for the third debate

in what has been a better race for the white house. donald trump has the opportunity to turn around a race that seems to be slipping away from him. let's start with a backdrop to this, the latest polls showing a nine point margin between hillary clinton and donald trump. has to be of concern to canada trump -- candidate trump. steve: this poll is exactly why all eyes are on donald trump. he has all the pressure on him because he is behind, and not just behind, he is losing support among some of his core constituents -- core supporters. he is down with men, down with less educated voters and the gap between women and the gap with independents is widening. he has to speak all of these audiences, tonight and he is preparing to doing -- preparing

to do that. does he stay on message? does he go rogue? does he attack hillary clinton? does he tried to be more presidential? we have been through this two times now, it is difficult if not impossible to predict what path he is going to take. what is the campaign saying about how he will perform? steve: they are pushing the message. if he stays on message, he will talk a lot about the rigged system. he has been talking a lot about voter fraud and a rigged system, taking down washington and cleaning it up and being this outsider candidate. that is what he says and if he stays on message, that is what he will be pushing. that allows him some inroads to attack hillary clinton on her e-mails, on some of these leaks but hillary, clinton got a gift, today.

marco rubio came out today and said that he does not think we should be talking about wikileaks because of accusations that they were obtained by four -- by foreign actors. he says every democrats are being targeted right now, but publicans could be next and that it should be off-limits. held could use that line tonight -- hillary clinton could use that line tonight. about then he talks media being complicit in a campaign against him, when he talks about elections being rigged, even in the face of centrist republicans saying it is irresponsible to be talking about these things, is he making any inroads or is he basically catering to the audience yard he has? steve: it is not making much inroads with the people he needs , too -- overcome the deficit he has. aides to attract more independents, more women -- he

needs to attract more independents, more women. it is a message that gives him a narrative if he does lose and a couple of weeks, he gets to explain it away to at least some of his supporters. it riles up a lot of his base. the campaign still believes that there are voters not being touted by some of these polls and they say that there will be secret turnouts, all these republicans that are not normal voters turning out, and that is the key to their success. the more a lot of people that do not believe there are enough of those voters out there, but the trump campaign does and that think this is the message to turn them out. david: one more look at that bloomberg politics poll. hillary clinton up to 40%. -- 47%, 30% saying they will 38% saying trump --

they will back donald trump. the debate kicks off tonight at 9:00. with all due respect will have a predebate special. coming up, an exclusive interview with a board member of deutsche bank. his thoughts on the state of the european banks and consolidation within the banking industry. ♪

david: live from new york and bloomberg's world headquarters, this is bloomberg markets. we start with first word news. mark: donald trump's campaign

manager says he needs a comeback in the final weeks of the campaign. kellyanne conway spoke to fox news ahead of tonight's third and final debate. with all due respect will host a predebate special beginning at 8:30 p.m., new york time. sign-ups for obamacare health will climb 8.7%, next year. about 13.8of 2017, million people will have picked individual health lands through exchange marketplaces. officials say the numbers show steady growth on insurance markets created by the affordable care act. a man wearing an afghan army uniform killed a u.s. service member and a u.s. civilian. a u.s. service member and two civilians were also injured. the attack took place inside a military base.

officials say the attacker was killed. michigan should consider abandoning it's one person emergency management structure and instead install a team of three experts winning disabilities and school districts fall under state control according to a report released by a legislative committee that investigated flint's water tainted water -- water tank crisis. global news 24 hours a day powered by more than 2600 journalists and analysts. let's take a quick check of u.s. stocks. the tao of 4/10 of 1%. the s&p 500 of about 3/10 of a percent. -- the dow up 4/10 of 1%, the s&p 500 up about

re-tenths of 1%. .- 3/10 of 1% abigail: the nasdaq is barely moving after yesterday's big move. the nasdaq fluctuating between small gains and losses. fool let that will you -- you. the surgical systems company shares, this is one of the biggest drags on the nasdaq after they put up a huge third quarter beat but what investors don't like, procedural growth only met estimates. investors are not very happy end in fact the stock is having its worst day since the beginning of february. as for a winner today, starbuck shares are up 1% after ceo howard schultz said the company

plans to more than double its andes in china by 2021 china could have more starbucks locations than the u.s. this stock has fallen almost 10% as u.s. sales have dropped. a roughly two-year chart of starbucks and we initially see a nice of trent and then a flattening. from a technical perspective, this presents a potential rounding top. we could in fact see shares of starbucks tumbled back toward $40 or so -- tumble back toward $40 or so. david: thank you so much. from exclusive interview executive board member of the deutsche bundesbank.

interview, he discussed bank consolidation and the state of the banking industry. andreas: the mood has been much better from the point of the banks, because clearly many things are coming together. we are having a brexit where negotiations will start at some point. we have low profitability in the european banking sector. we have quite some high performing loans. we have volatility in the bank stock. we had a pressure on the banks from the stress tests of the european banking association and the ecb. lots of things are coming. of issues, which take a lot of management time and attention. people say they don't quite

understand european banks when they become stronger, or why it takes this long. how do you answer those criticisms? andreas: everybody has to make up their own mind and we are not advising anyone on how to inc. about any bank. capital positions of the european banks had been strengthened. don't forget we have come all the way up from 9% to 15%. lots of things have been done, which are much better. at some point, it seems as if the global financial markets have given up a little bit on stock markets in the european banks and it has quite a bit to do with the level of profitability of the banking market, where there is high competition and the profitability is not as high as other markets. from a solvency point of view, many things are much better off.

the structure of supervision has changed quite dramatically. 4, only finishing the second year of our new supervisory regime, so we are at the beginning of things. there has been generational shifts in the bond is bank -- in the bundesbank. help me understand or can't -- or consolidation of european banks. withinadvocate mergers nations, within borders, or can there be cross national mergers within europe? andreas: very good question. then't think it is really job of the central bank or the supervisor to advise on mergers and acquisition. at the end of the day, the

market has to decide if the havingrs or clients -- said that, as a supervisor, i have strong interest in a sustainable profitability of the banking sector, which means that you need to make your cost of equity, you need to earn your cost of equity and depending on your -- especially if you look to germany, where the economy is going reasonably well, you'd expected in times like that, banks are in their cost of equity because they need to do that in order to reserve for worst times. not advise on mergers and acquisitions, we are interested in sustainable, reasonable profitability that is not 25%. it means that we care about that, which means that

consolidation should not be -- if a bank would exclude consolidation, that would be wrong, but on the other end, it means that if two weak banks are going to go together, it is not going to make a healthy bank in mathematics. tom: you enjoyed vice chairmanship at the bank of america before you entered on this bank -- bundesbank. there is a mystery to it, what was the biggest surprise when you shifted from commercial banking to the great, mysterious bundesbank? andreas: having been supervised myself, and now i am at the

longest any member and i can tell you, in the bank of america, there was quite some bureaucracy and there is some here as you would imagine, but i may of 2010first of weekend, we had the first package for greece, so i have been living through the entire euro crisis and it has nothing to do with the currency. i can tell you that many people work much harder than you look from the outside within the fund this bank -- fund this bank -- and this bank -- bundesbank. there is a close corporation amongst ourselves and i was very impressed and i really enjoy my time. david: that was an exclusive interview with undressed ombre

-- with andreas dombret. morgan stanley reporting a 57% increase in third-quarter profit. let's look at some of the trends that have emerged here. $1.5 billion, triple in this quarter, a surprise for analysts. >> analysts have been looking for this $1 billion number. the ceo said last quarter, this is something that we want to circle, we have to have $4 in the of revenue, and end, he said the quarter maybe let more, but nonetheless, getting that billion after cutting those many jobs is quite the win. david: talk about that, project streamline, we certainly heard about it, about the way it has been cutting costs at bank of america and goldman sachs.

these banks have to do that, because they have to cut some of those expenses. we talk about profit margins, evenalaries are stalled, for big banks like bank of america that has more of the commercial banking side, and maybe a little bit less of a trading mix, those costs are something they have to rack out of there, so it is something they cannot -- it is something that they cannot get away from and there is only so much you can do with overhead and stocks traveling and at some point, you have to cut salaries. about what did we learn -- this is not been the best time for that line of work. laura: goldman sachs gave a little bit more color on it. they sort of said look, global slowdown, everyone is

experiencing this and to some degree, that is the case. if you look at bank of america or jpmorgan, they did not have the decline in their revenues, which morgan stanley and goldman sachs both did. -- they didn't talk quite as much about that possibly because there is so much commentary on the fixed income side, but it does change a little bit with morgan stanley saying maybe we will see that in the fourth quarter. there really is no rhyme or reason for that, right now. david: the ceo on that conference call, you have a new piece looking in more detail at that scandal, continuing to unfold. laura: i did the piece on two colleagues and we basically look at this issue, and the issue is that in making these bogus

accounts, opening legions of these accounts, they were just trying to meet these sales goals and looking at any way they could possibly get there and one of the things they found to be a perfect victim was these latino immigrants. they would target these people, because they did not actually have to have a social security number, they could just use these cards as ids and in the end, what happened was employees are making all these bogus accounts for latino immigrants who had far less of an ability to speak out between language barriers and things like that, so the sort of knew that by targeting these particular customers, they would not get caught as easily as with other customers. david: there has been a push by the federal government and others to get the latino minutes he, members -- many members have traditionalg any

banking sector and this cannot be good news for those advocates. expressedy frustration because as you said, people like the fdic, federal regulators -- wells fargo was a -- as a wayis and to get people away from predatory lenders. it is ironic to have a bank that set out to help the customer and in the end result demise them -- them. end, re-victimize david: coming up, something for you wine lovers out there. this is bloomberg. ♪

david: you are watching bloomberg. mark: this is your global business report. u.k. has not left the eu yet. there is speculation on how long it will take for the two sides brexit trade agreements. in today's quick take, china's bringing -- brimming debt, could it be a threat to the global economy? will take the u.k. more than two years to get a new trade deal with the european union according to a new

bloomberg survey. morede agreement will take than five years according to a fourth of those surveyed. actuallyhas not activated article 50, which would give the country two years to leave the eu. we spoke with the deutsche bank global head of fx. >> the pound could go into a freefall as it were and we could actually see rates really picking up quite sharply given the inflation repercussions. we have seen the bank of england take a fairly sanguine view on the chin as sort of a one-off. i don't think the selloff in the gilt market is going to be too acute. proposedliburton surprise profits in the third quarter. to read about operations, halliburton reported its first increase in north american sales since the oil slump began in late 2014.

in china, attempts to cool off the property market don't seem to be working. rosealue of new home sales 61% in september from the year-earlier. least 21 chinese cities have imposed purchase restrictions and made it tougher to get a mortgage. matt: time now for the bloomberg quick take where we provide context and background on issues of interest. china's $25 trillion debt is a threat to the global economy or maybe it's just a byproduct of the boom created by the world's second-biggest economy. either way, the buildup has been breathtaking. here is the situation. china is our -- china's borrowing soared to 7% of gdp. outpacing the surge in the u.s. and the u.k. before the financial crisis.

the problem could be bigger still because of the frantic rate of new lending which makes it hard to know how many loans are not being repaid. borrowing by china's provinces skyrocketed 53% in the two years through the end of 2015 and new credit is booming this year, much of it flowing into a resurgent property market. here is the background. during a 2008 financial crisis, beijing order local governments roads, bridges and public works to keep the economy pumping and workers in jobs. it set off a borrowing binge that invited comparisons with japan debt bubble -- japan's debt bubble of the 1980's which ended in a property and start market crash left zombie banks saddled with bad debt. companies and local governments can simply grow their way out of the problem as an expanding economy supports borrowers and creates inflation which erodes

the burden of debt repayment. china's high savings rate and its current account surplus help as well. problem issay the not self-correcting and the expect policymakers to tackle nonperforming loans and stave off default. there is a risk that china's debt could remain a drag on global growth for decades. you can read more about china and all of our quick takes on the bloomberg. that is your global business report. had to bloomberg.com for more stories. ♪

david: this is bloomberg markets.

one of australia's most prestigious wines has earned a perfect score from critics. they will also be available for the first time in the highly limited six liter bottle at a six-figure price tag. paul allen reports. paul: the only thing better than a bottle of grange is a really big bottle of grange. the wind has just secured another perfect score from critics, so it is being released in the ultimate celebration size. >> we had these bottles, previously. every now and then, we have released one at auction and there was pandemonium. we thought why not release a few and why not with -- imperial thatan holds six liters of grange.

i am too scared to pick it up. i'm not sure they would like me to. there are only five of these being made. it obviously needs a special server. unique fors are also being impossible to pour. five of these decanters were to give theby hand 2012 grange and the decanter a $185,000. >> we have more than 1800 simple diamond cut wine bottles. -- a smaller but equally impressive version is available at just over $2000. >> the refractions of the light

of the crystal and the wine inside the crystal is fantastic. it is so clever, the way it is done. paul: as for the five imperials and the decanters, they are buyers youerved by are seriously protecting the right and. david: that was paul allen. for more, check out pursuits for the art -- pursuits, your destination for the finer things in life. still ahead, we sit down with erik schatzker breaksclusive into you from the dell emc world expo in texas. ♪

>> 1:00 in new york. i am david gura. welcome to bloomberg markets.

from bloomberg world headquarters in new york, we are covering stories from vegas to austin, texas. michael dell will speak in just minutes. speak and an exclusive interview and austin, texas. we go to san francisco at the establishment conference. richard blumenthal joins us live epipen.o to discuss the halfway through the trading day. julie: likely on the price of oil. better than estimated earnings. if you look at the s&p 500 and the two-day performance, we have been watching that.

balance has been a struggle for stocks generally. i mentioned oil and what we have seen their. on an the highest unexpected drawdown, as well saudi arabian oil minister saying non-opec nations are willing to sign on to an opec production agreement. well.utures bouncing as as far as individual stocks, a lot of speculation and reports surrounding m&a. higher after there are reports chinese buyers are looking at the company. -- gnc higher.

jonathan lynch known for targeting real estate companies. it has been trailing real estate performance over the past year. rite aid, a-- report that shows kroger's had been set to buy some of the companies stores as a way of getting regular -- regulatory approval, and another in capital forum. not enough to satisfy the fcc. it is heading lower. spanishkors after a language website reported on a possible takeover offer and did not name of buyer. some of the other permit to a

upper luxury shares rising. david: thank you very much. julie hyman with the market of they. mark crumpton with the bloomberg first word news. clinton and donald trump will be in las vegas tonight for the third and final presidential debate. a poll shows that mr. trump luck and a big win. a survey shows mrs. clinton ahead in a four-way matchup that shows trump has been losing support among men and less educated. heilemannrin and john will host a predebate special tonight at 8:30. streamed -- be live live streamed on twitter. mr. trump's home in queens is on the block. it will be auctioned today at the roosevelt hotel in midtown manhattan. the opening bed, 849 thousand.

he lived in the home built in 1945 his developer father until he was four years old. officials say a super typhoon has slammed into the northeastern philippines with fierce winds and rain. winds gusting up to 140 miles per hour. people living in the area are being moved to higher ground. being canceled in school classes canceled as well. adam silver says returning the all-star game to charlotte, north carolina, in 2019 is in his word's, a high priority, but ays there needs to be resolution to the state law that restricts the rights of the lgbt community. recently moving the game to new orleans. global news 24 hours a day than 2600 more

journalists and analysts in over 120 countries. this is bloomberg. david: dell announced it would acquire enc in the largest transaction ever in the technology industry. today holding the first ever dell enc world conference. c conference. joining us is michael dell. erik: as you say, i am here at dell emc world, the first of its kind with none other than michael dell himself. great to see you. if you don't mind, i would like to begin by getting one important question out of the way. many people are interested in the answer. by combining dell and emc, you created a gigantic company, 75 billion and revenue. what people want to know is

this, are there more opportunities out there for michael dell to consolidate this industry? >> absolutely. if you think about this as a i was to go private in 2013. two, the combination of dell and emc 2016. you are asking about act iii, but you will have to wait and see. >> how long will we have to wait and see what act three is? >> right now we're focused on dell emc an digital and all of the great things we are doing for customers. of opportunity organically to consolidate. we will continue to make acquisitions. we also have the ventures program where we are investing in hundreds of the companies that are 24, 36, 48 months out

from the future. both the desire, and financial flexibility and capacity to do those things. >> we absolutely do, yes. >> when i ran into you yesterday, i would say that you were positively giddy. voyeur's excitement on your face right now. what is it about the future and what you are doing that has you we are excited>> because what we are able to do is create a company that is number one and everything all in one place. number one in servers, storage, cloud software and cloud infrastructure. buying this with an incredible scale. $74 billion in revenue.

140,000 people. the broadest reach in terms of customers and partners, and incredible, innovative r&d engine. over 20,000 patents issued and applied for. 4.5 billion per year and research and development. we are investing and growing and and our competitors are doing the opposite. when competitors see how strong the capabilities are with the combined company, we are winning. erik: let's put numbers around the sense of scale. is it that you are trying to tap into? >> what is happening right now in the world is the cost of making something intelligent is approaching zero dollars. is you thinky that about the pc and the smartphone

and the handheld devices and the sensors, the cost of the semi conductor component and the increasingly small devices is going down. that, you have an explosion in the number of devices. if you buy a car today, it is a computer on wheels. it is any part of the physical world. it is the digital transformation. you go from 8 million to 200 billion.

that is creating enormous amounts of data. how do you turn the data into better decisions so you can make better products and services and create better outcomes for students and for patients? on top of that related to computer science, which is around artificial intelligence, machine learning, and unsupervised learning by machines that look across the vast amount of data and among thecorrelations we humans cannot comprehend because our brains do not work that fast. the combination of the data at the new computer science, and we are just at the very beginning of this. past several decades

i.t. has been about making business more efficient, more productive. we will take the physical spreadsheet and make it digital. now you have an old -- a whole other change occurring, and it is just starting. erik: you have been outspoken about the benefits of being private. >> we do love being private but we do have two public companies. is clearly aemc risk that few public companies could have taken. i am wondering about now. now that you own it, what kind of risk can you afford to take that your competitors can't? >> as a privately controlled , your time horizon is very different. you reimagine your business.

it allows you to reconceptualize how you are investing and what their real priorities are. we had some pretty outstanding results. i am talking about cash flow by the way. from a market share standpoint, share in all of our markets, even if the markets were shrinking, we were growing our share. generating very strong cash flows. emc plus delline as a privately controlled company with a long-term time horizon and it frees up a lot of time and allows us to have a much different perspective on the business. i think that some

public companies fall into the trap of managing in the 90 day cycles. not going to suggest there is one company you might have in mind. perhaps you will. the two leading companies in your industry are taking to distinctly different paths. you are getting rigor. you merged with emc. is spinning off a good part of the software business. as you know, meg whitman is not shy about trash talking. she says dell is too big to be agile. direct quote. i think it is difficult to be levered as much as dell is in this environment. what do you say about that? you look at the last quarterly results from dell and emc, which is all public information.

flows of alle cash the organizations, $3.6 billion. for the last quarter. our interest expense is about 600 million. erik: so you have six times coverage? and look at companies, you will find that as a conservative ratio. the numbers are vague. sizey has a business this that is doing things ethically as we are doing them. -- ethically -- epically as we are doing them. the sizes down year over there have been plenty of folks who have criticized them. think shrinking your way to success really works. not ak the strategy is

self-created strategy. i think it is a reaction to the formation of dell technology, which they knew was coming before they made the decision to let in to. -- in two. they have had to react, and the set of reactions that they can have are fairly limited. erik: what about the agility? do you feel dell technologies is nimble? >> as a private company, i think the agility is fairly high. we have a structure where we have startups within the company that are vast running and largely lead alone -- largely leave alone.

we provide resources to a number of them as part of the nimble? family.private company, i the agility in terms of speed and decision-making as a privately controlled company is unparalleled. erik: one thing meg whitman is willing to acknowledge is you are the only competitor she cares about. who do you follow most closely? who do you worry about? >> let's first of all frame what we're talking about here. the industry is roughly $3 trillion. of the 3out 74 billion trillion. actually an enormous opportunity for us well beyond piece of it. if you look at the 3 trillion,

nobody has an enormous percentage of it. it is actually white distributed. actually percentage of it. it is actually white distributed. actually the 3 trillion is much more interesting. but when you make the transition from information tech knowledge he to business technology with the digital transformation, the 3 trillion becomes a trillion. change going big on here. what is happening here is you cannot be a company without technology. noteu remember on the key stage we had ge and ford and at&t -- there business is fundamentally becoming a technology business. they need a whole new set of capabilities. i.t. is not the back row thing anymore. anyk about any activity in organization, selling, working

with customers, supply -- supply is not justspect the back room kind of activities. erik: you raise an important point. technologyissue to or that needs to take advantage of tech knowledge he. as you know, every single day it gets easier for companies to migrate data to the public cloud . amazon and microsoft are making the cloud cheaper, more scalable, more ubiquitous, and more secure. as relevant toin cio under those conditions? >> -- how does dell remain as relevant? >> the cloud is a way of doing

i.t.. what it has run is created automation that has made it easy to cio under those conditions? >> move workloads. it turns out this idea is not x uses to the public cloud. experience because we have been selling billions of dollars to the cloud for years. betweenest difference what they are operating in the mega clouds and what the individual companies have operated in is the software. modernizing the data automating wen are able to bring customers as set of alternatives to make the on premise infrastructure much more relevant. workloadsu will see figuring out by company, where

is the best place to put them? some will be software to service. one thing that is unmistakable about the public cloud providers -- providers. amazon web services and a microsoft product is they are redefining the economics of i.t. infrastructure. how do you or anyone else in enterprise system preserve margins and a deflationary environment like that? >> what is redefining it is automation. the real issue is that if you do , there may be a lot of people sitting in the silos. what is growing faster than the cloud is the hyper cloud and converged infrastructure.

so i think there's not just one answer here. loadse seen develop work and then decide to put them on premise. you probably saw just last week, of great new partnership. there is also a great firm aware and ibm. itk: you are not calling this. the number one public cloud and private cloud working together. the reality is, they arty have a multi-cloud use. they like the ability to move them back and forth, depending on the predictability and cost

and what the requirements are for the workloads. we can make the on premise infrastructure way more competitive and extremely secure. if someone says i have a cloud verse strategy, i am moving everything to the public cloud, i think they will find they are uncompetitive for the applications of the project bulwark load. everybody has choices. we are selling quite a lot to the public cloud providers. cloude a platform neutral platform as a service. if you develop it, you are not locked into one side. for mission critical apps, some customers want us to run it for them. such a pleasure having you

here. great to be here. that is michael dell, founder and ceo of the newly brown -- free brown did -- rebranded technology. quite a show here in austin, texas. david: erik schatzker with michael dell in austin. the canadian dollar erased gains after the bank of canada's governor said the central bank actively does this the possibility of adding more stimulus and the economy. we had to toronto for the latest next. this is bloomberg. ♪

coming up tonight, the third and final presidential debate. it pre-debate special at 8:30 wall street time. , aaron levie live from vanity fair's new establishment

conference. his thoughts on where the cloud computing's ace is headed. this is bloomberg. ♪

david: live from bloomberg world headquarters in new york, i am david europe. starting with headlines from the newsroom. mark: hillary clinton and donald

trump me tonight in the third and final presidential debate. among the topics he will focus on, immigration, the economy, and the supreme court. also asking questions almost certain to result in fireworks. heilemannrin and john will host a predebate special. new york time.0 it will also be live streamed on twitter. shows hillary clinton is making once unthinkable inroads in the state of nevada. giving hillary clinton a five point lead among unlikely voters. 39%-30 4% in a four-way race. the battle for arizona's electoral vote remains wide open.

no democrat has claimed arizona since bill clinton won in 1996. the specter of more economic sanctions is hanging over russia today. berlinnt clinton is in on a cease-fire talk in eastern ukraine but overshadowed by the civil war in syria. germany, the united states, and kingdom are considering whether to impose more sanctions on syria. for the first time in 17 months, the world did not set a heat record. u.s. government data shows it was the second hottest september on record. scientists say the weather phenomenon known as el niño faded in june. global news 24 hours a day powered i've more than 20 hundred journalists and analysts .n more than 120 countries

i am mark crumpton. this is bloomberg. david: the canadian currency has seen jack and ms. in reaction to the central banks governor comments. leaving the door open for future stimulus if needed. why do we see the currency gaining in response to the as you said, it was as expected. rates were left unchanged. originally we saw a jump of. downside risk to inflation. then as the press conference opens, the governor of the bank of chama -- china said the bank had only been discussing further stimulus. that was an active discussion at the bank. pushed the target to

fall output to mid-2018. in fact, the comments were about as downbeat as they have been in months. >> we have been talking about the housing sector. what did the governor have to say about housing in canada today? >> it was one of the ,ncertainties they pointed to the central bank is trying to traverse through. this was brought forward on october 3. it looks like they could well resales, which is part of the overall aim of the measures coming in. in a way, we thought that would take the pressure off of the central bank. rates are very low. maybe this would ease up on the pressure of the

central bank had. that said, even though the housing measures have come in, that is not a barrier to cutting rates further. there was a silver lining. pointing to the fact that the fiscal stimulus the government is introducing, he sees that providing a 1% boost to gdp by 2000 18 -- 2018. now to sanad francisco where affinity bear is meting a new bush conference. emily chang is there and standing by. -- hosting an establishment conference. erikmily: i am here with erin leavy. we touched on the election. the last debate is tonight. you have been very vocal about

your support for hillary clinton, as well as the major conference. emily chang is there and standing by. --tech blog -- technological disruptions they're about to happen. how much is that take in this election and the next three >> the next three weeks is probably more for the clinical analyst. for this election and the decisions that will impact the next decade a lot is at stake. in many cases the benefitsfor te decisions that will impact the next decade a lot is at stake. in many cases the benefits of society and progress around life sciences and finance, there is a lot of change, and we need to make sure we are prepared as a country. we need to make sure our businesses are prepared and education is prepared. that is why this election is such a significant one. we are going to elect someone that is at the center of a

distant -- significant amount of change and disruption. we need to elect someone that will be incredible -- incredibly thoughtful. what happens when self driving cars disrupt the trucking industry and auto industry or go what happens when new forms of health care emerged that completely change the health care system? we need to have someone that country navigate the disruption and transformation. vocallyeter thiel has supported trump. he has donated one point two $5 million. -- $1.25. what is his agenda? >> it is super hard to guess. obviously he has a streak of being highly contrary and. whether it is betting on a random kid that just dropped out of college and that company

becoming facebook to some of his political views. potentially building its own sovereign nation and an island on the sea. many of his ideas are very contrarian. i cannot talk for him, i would suspect there is some idea in here that he believes there will be some type of disruption, transformation with the political system in this election. endorsehope he does not the ideas of trump and many of the rhetoric we see from trump, but i think he is expecting dramatic change because of the election. emily: a constitutional right to vote to you want to vote for. concern he is on

the board on a company as influential as facebook. some think those companies should kick him off the board essentially. what would you do if he was on your board? >> definitely a challenging company. i think he is put the leaders in a difficult position. those organizations and its two shins represent progress and innovation and having a society that accepts different police and ideas, and donald trump is the exact opposite of that, at least his rhetoric and actions in the past. i think unfortunately he is putting them in a complicated position. certainly i am very anti-trump in this case. hopefully those individuals will be able to navigate that. : you are partnering with them. what makes you think facebook can succeed in the enterprise where they have not before?

>> we're been doing enterprise software for many years. consumer experiences are now impacting the workplace. we all using iphones. many of us are using gmail and do our job. to portal't there a central so we can connect and be able to find out who is working on what organization?he there is long been a vision why hasn't there been a facebook for the enterprise?book is saying we will be the for enterprise. they are now beginning to resource that in a way that could let them be quite successful. emily: can it kill an upcoming generation of enterprise software gekko >> whether it is team communication or share

content easily, whether it is your hr software or integrating with other tools you are using, there is an ability to interconnect the different applications you are using. i think this represents the much broader transformation happening in the enterprise. they have nothing to worry about because they are very mission -- focused. >> a report about leaked e-mails from colin powell on the board of salesforce that revealed salesforce has more than a dozen -- a dozen acquisition targets including fox and others. did you ever have conversations with salesforce, and if so, tell me every everything. >> many have personally has been a personal advisor. we are always talking to

salesforce about partnerships and ways to work together. cannot comment on anything beyond that. levy, great to have you here. david: thank you very much. emily chang life from vanity fair's new establishment summit. a bit of breaking news about tesla. a tweet went out sunday saying it was unveiling a new product wednesday. elon musk tweeting there will be a tesla announcement at 5:00 california time. following it, 30 minutes of media q and day. an announcement at 8:00 wall street time. demanding thethal doj reject a never depend reclassification settlement. we will hear from him next in studio. this is bloomberg. ♪

david: this is bloomberg markets. my linen agreed to pay the department of justice 460 $5 million to settle questions regarding the classification in the overcharging for the fb pen. richard blumenthal called for further investigation, saying it is a shadow of what it should be in the lacking real apparentility for the lawbreaking. joining us is jerod hopkins. are you encouraging the doj not open? whatto keep it more are you looking for? do you think there is more to be view, the >> in my amount of money is inadequate.

of $700n the range million, as opposed to the 465 mylann that my land -- has said is involved in the settlement. most apparent to me is the complete lack of investigation. that amount of money may be willfully short of what it should be. we have no way of knowing. i asked for a criminal investigation. what is involved here is a potential false claim under the false claims act of fraudulent claims. individual should be held accountable if in fact there was criminality. david: what do we think happened here so far? what seems to us -- seem to have happened is they seem to have that live really

misclassified the drug calling it a generic multi source ins brand. a single source what is the difference? the amount every date is a big difference. 13% versus 23%. a 13% is what they were paying opposed to 23%. that harmed packs payers significantly. i am concerned about connecticut taxpayers. we have medicaid liability as well. we paid as there do money for rebates, and i want to make sure state taxpayers are made whole. david: they are receiving medicaid money. from what you know now, showed that continue? should this company be receiving government aney? >> this product is lifesaver. st the pens can save -- epipen

can save children from allergic reactions from everything to peanuts to pollens, to whatever. they are vital. raised pricesas by 600%. this product needs to be replenished every year because it goes out of effectiveness, so we're dealing with a really essential product that uses a type of injector. complicated, but the government should make sure this product is available to everyone. i was instrumental in legislation that makes available by statute, supports the product. i am glad we are doing it, but that in no way justifies price gouging and profiteering. that is the other side of what the type of injector. complicated, but the government should make sure this product is available government should be , investigating those potential illegalities as well. david: the controversy seem to abrupt in the past few months.

>> that is one of the key questions. why it happened without an investigation. my complaint about the happened sos it quickly without an investigation and full fact-finding and accountability. they can also take a pretax charge against the quarterly earnings. so this deal is really a sweetheart agreement and should not have happened this quickly. david: do you sense there are other drugs that could have been misclassified? >> very much so. there are other drugs that may well have been misclassified where the government was not receiving the rebate it should. that should be a subject of investigation, and to settle this case this quickly may be l but it is not good

for the american taxpayer or patient. beingcomplain about cost too high. here is an example of the government to be able to send a message that we will not allow fraud or arbor -- or overcharging. david: are we at a tipping point ? of points where maybe the government will do something additional or how do you see this playing out? >> the government really should do something different and be much more determined in the way that it brings medical costs down are one of the main reasons they continue to rise. point, i a turning think, with many of the drug prices, because clearly a 600 percent increase is not only bad for the average american family

cost,s to pay some of the but american business, job creation, economic progress. david: help us draw the line between the frustration we have been seeing. there are calling for action to be done. what does responsibility look like in this context cap of the former ceo of wells fargo and capitol hill, it your colleagues in the northeast asking to take responsibility. what does executive responsibility look like? >> i am a prosecutor by training. i was the chief federal what does responsibility look like in this contextprosecutor d then the attorney general of our state for 20 years. i am thinking deterrence, accountability, and the best way it is by holding

individuals responsible. continuing the investigation on wells fargo to determine who was responsible, to determine individual accountability, and criminal responsibility ought to be imposed where appropriate. i am not drying judgment about any individuals who may be involved in the companies. fact-finding has to be done before anyone is judged criminally. message like a criminal culpability, a finding of guilt. dayink at the end of the there is broad, there should be criminal culpability. david: richard blumenthal here with me in new york. emily chang will speak to the vanity fair editor in san francisco.

coming up, the costume company predict who can will win presidential elections, at least most of the time. this is bloomberg. ♪

david: this is bloomberg markets. i am david gura. a look at some of the biggest business story submitters right now. hackers who relentlessly pursue banks may run into tougher defenses. issuing a proposal today requiring the industry and outside firms to better safeguard itself and customers. instructing banks more than 50 billion in assets to make them more aware of what is happening in their own systems. pay 40 million dollars and penalty because it does not clearly tall customers as unlimited. the sec announced the sanctions. $35.5 million for the discounted

year or customers. times has named the deputy publisher commissioner to take the reins from his father. arthur sulzberger junior. if he does and that succeeding his father, he would be the 35th -- he would be the fifth generation. st. jude medical facing new allegations from muddy waters. they said the pacemakers and to figure latest can be easily hacked and turned against patients who rely on them. releasing a technical -- .echnical video saint jude says a stance by the security and safe he the devices. starbucks pushing ahead with expansion efforts in china. on track to have 5000 stores there by 2021. starbucks has 13,000 stores in theu.s. and that is

bloomberg business flash. walternstitute president isaacson joins emily chang and brad stone live from the new establishment summit in san francisco. this is bloomberg. ♪

emily: it is 2:00 a.m. in new york, 11:00 a.m. in san rancisco and 7 p.m. in london.

> this is bloomberg markets. >> start with breaking news at the top of the hour. we're awaiting the feds beige book and go to ginny who is in washington, d.c. what is going on? >> we saw a mostly positive outlook in october. we saw a modest to moderate pace of expansion, wage growth has reported as being modest across most districts and labor markets remain tight. the housing expanded most districts although we saw some housing constraints as we saw less inventory in many districts. oliver: as we're looking to look here, is there a big take away, something that jumps out at you particularly different? >> the big take away is what we generally saw an anecdotal representation of what the fed

is dealing with all year. we're seeing modest wage pressures, a pickup in the labor market. conditions remain tight and inflation has been slow to accelerate. this confirms what they have seen all year. oliver: we're coming back to you in just a few moments. let's check on how markets are reacting, julie hyman joins us now. julie. julie: stocks are higher today, around the highs of the session for the moment in the wake of beige book report. typically there is not a large amount of market reaction to it. oil prices today saw a big lift to a 15-month high following the weekly inventory numbers. so let's break it down and look at the groups that are on the move. the i-map on the bloomberg, up 2% followed by the financials which have also been strong and then you got materials as well participating in the rally. we're seeing something of a rotation out of the more

defensive groups like consumer staples and utilities in today's session. we also got a number of records or at least 52-week highs to highlight today, a number of them in the various regional or monday center banks. these companies didn't come out with earnings today, some of california and regents came out with their numbers yesterday. they're pushing higher today and all three banks are at of c 52-week highs. we also have highs within the energy industry, halliburton is one of them. that company posting an unexpected profit. more clients are reramping up preducks here and a new high as well. then there is some interesting duo that we're looking at today. you can look at the bloomberg. you can look at m.i. wilson. this is a chart that comes to us courtesy of dave wilson. he is looking at dominos pizza versus alphabet class a shares. check it out.

dominos shares, if you look at the total retear have actually outperformed those of alphabet if you go back to the i.p.o.s in 2004. half of the game that we have seen in domino's in total return terms comes from dividends, class a shares don't pay a dividend. we haven't seen quite the same return. for domino's it's 2,100% and for google 1,900%. domino's with the white line taking over google. pizza over google, who knew. scarlet: let's get back to the beige book. geena is standing by in washington. there are a couple set officials that spoke today. we had williams speaking in new jersey, kaplan speaking in texas right as the fed was getting ready to prepare the beige book. fold in their comments and how it matches or strays from what we learned in the beige book.

jeanna: looking at the fed comments more generally over the last couple of weeks, we see a solid match between what they're saying and what we're seeing in the beige book. the big takeaways from the beige books, we have pretty tight library markets but waiting on inflation. that is what fed officials have been telling us. they have been broadly saying we have been seeing a really solid labor market. we might want to test the limits of how far we can go there as inflation is back to 2% target. scarlet: that's a debate that is brewing within the fed. what about the election, was there any certainty relating to the upcoming election and how that might be holding back some businesses or consumers? >> we did see that. the commercial real estate contacts did report some worries about uncertainty related to the presidential election. what we didn't see was a broader mention of that. that was a bit of a surprise to us. in commercial real estate, that clearly is a concern. oliver: the conversation out of the fed minutes and the past

couple months has been rethinking inflation, what sort of metric they need to target. was there anything from the beige book of anything that is going on in the u.s. that might advance that conversation at all? >> i think what is interesting is we did see in the beige book mentions that we're seeing only slight, very gradual increases in inflation. we are seeing signs of wages picking up, which is what i think a lot of people at the fed were looking to see. eventually will that lead into inflation. i think these anecdotes sort of feed into that discussion that the fed is having more broadly. scarlet: thank you so much, joining us from washington on more with the beige book. oliver: investors looking for safety have been attracted to low volatility funds like blackrocks, i-share edge, recently the fund has been on a bit of a bumpy run with volatility eclipsing that of the standard & poor's. danny burger has been looking

into this trend and joins us now. this is probably one of my favorite stories in the stock market. all of these people have been rushing in to all of these low volatility funds, defensive type stocks. now it's kind of getting a little weird. what is going on here? >> these have been probably one of the most popular, if not the most popular smart etf, $6 billion into one blackrock product year-to-date. essentially what's happened, if you look at the swings in this product, this is giving you exposure to low volatility, muted swings, a safe haven. it's been swinging more than the standard & poor's for the past 4 -- s&p 500 for the past 42 days. this has happened in the fund's past eight times. on average this happens four days and currently we're in the 42nd day of this occurring. oliver: you want to illustrate this real quick, we have a chart had to shows this. it's really astonishing. this is supposed to be a low volatility e.f.t. this is the chart on the

bloomberg right now. we look at the top panel here, this is the 30-day volatility spread. and here is the break even, the yellow line right here, the 40 days you're talking about. it doesn't seem to be changing. what is going to get this back to normal or is this sort of the new normal for some period of time? dani: this says a lot about the dislocation in the market about defensive shares. you wouldn't think it would swing that much, it would be utilities, real estate and a lot of dividend payers. think what is happening in the market right now. we had the rotation where once dividend paying defense shares have done really well. all of a sudden they're moving quite wildly as we're moving towards what is likely to be another hike by the feds. it has allowed this continued volatility from the so-called ow vol e.t.f.s to be sustained?

scarlet: what is the relationship in the broader market? does there have to be broader market volatility to see the large swings? >> the market as a whole right now which we have been talking about a lot is pretty muted in terms of volatility. the 30-day spread we were ooking at before for the s&p 500 is below the 10ier average. blackrock would argue is part vol e reason why the low e.f.f. looks so choppy. it's 32% above its five-year average. it is moving a lot. scarlet: the way the e.t.f.s are constructed, how long should she hold on to them before? 42 seems short if you're a long term investor. >> there are two camps. buy this, hold on to it for the ress of your life. low volatility does well in a long stretch, beats the market.

truth be told, there are a lot of investors that i have talked to that fancied themselves, investors tuned into this stuff, they want to hold it and kind of decide when they think it will do well and when it won't do well. they're not going to hold on to it for their entire life. oliver: dani: talk about the flip side of this, investing into these ideas. this is fantastic in the terminal. we're talking about low volatility. let's look at the momentum e.f.f. this is your ishares momentum, using the port function on bloomberg. 15 pst stapleles. telecoms at 5:00%. let's change this for a year ago, wait for it and it's totally different. utilities aren't on here. telecoms are way down here. this speaks to the way the markets move, adjusts to what is in these funds that normally isn't there. what do the operators say about

that, are they ok, feeling comfortable? dani: if you look at the individual stocks and the e.t.f.s, they share 33% of the same funds that the momentum one does. there is a strange convergence here. blackrock, it's not just low volatility, it's risk mitigation. part of risk mitigation is you throw some diversity in there as well. it's not that much of an issue that we have some momentum looking shares, but 33% is a lot, so i mean it might be just kind of a strange dislocation that is happening at this moment. scarlet: when do they change out the numbers? dani: twice a year, may and november. we may see the wild moving stocks that they've been moving a whole lot and changing averages. the it might fall out of the risk construction and no longer be in the portfolio. oliver: great stuff. it's one of the most interesting stories in the equity market. that is dani burger.

scarlet: the first word news this afternoon. mark crumpton has more from our newsroom. mark: breaking news at this hour. authorities say two firefighters and two civilians have been injured in a powerful explosion that shook a northwest portland, oregon neighborhood. you're looking at live pictures on your screen. the blast reportedly occurred as utility workers were repairing a damaged gas line. fire officials say the situation is fluid and authorities continue gathering information about that blast. of course, we'll continue to follow this story and bring you the latest developments as soon as we get them. in if donald trump is going to win the white house, he'll need a historic comeback to do it. that's according to the latest bloomberg national politics poll. hillary clinton leads mr. trump in a four-way race. the survey was taken after a leaked video prompted a series of women to come forward saying that trump had made unwanted sexual advances. his support among men and the less educated has gotten

weaker. early voting by mail or in person is now underway in more than 30 states. at least 2.1 million people have already cast ballots. more than 45 million are expected to vote before election day, november 8. early balloting so far has shown promise for hillary clinton in the battleground states of north carolina and florida while donald trump has generally held ground in iowa and ohio. police in the czech republic say they have arrested a russian hacker suspected of cyber attacks in the united states. the man's name wasn't released. officials say he was apprehended in a prague hotel and after the arrest, he was hospitalized. a court will now decide on his extradition to the u.s. global news 24 hours a day powered by more than 2,600 journalists and analysts in over 120 countries, i'm mark crumpton, this is bloomberg. scarlett. scarlet: coming up, we have a big lineup of guests from the

"vanity fair" summit in san francisco including the magazine's editor. that conversation is coming up. this is bloomberg. ♪

oliver: this is bloomberg markets. scarlet: let's head out now to san francisco where we have a huge lineup of special gists from the "vanity fair" new establishment summit. emily chang and brad stone are head of global technology coverage are standing by. emily and brad, take it away. emily: scarlet, thank you so much. we are here with the editor of "vanity fair" himself as the conference has just kicked off.

i'm curious was it an obvious choice who is at the top? >> it was an obvious choice. he has had an amazing year. amazon is one of the most extraordinary companies on the planet. all of his extra curricular activities, he is sort of playing chess while everybody else is playing checkers it seems right now. oliver: this is the third year having the new establishment summit. we asked if it was all different and we felt the environment in silicon valley was a little bit vobbley. does it feel different this year? greydon: it feels solid in a way. the people at the top of our list have had amazing years. things feel more settled and less out of unicorny and bubbly. i think it does, maybe in a flat period which is probably a good thing rather than an up

and down period. emily: speaking of unicorns, you are speaking of travis of uber who is also near the top of the list and the debut was made at number nine. why? graydon: this is the driverless cars, car sharing, everything, this is a thing of the future for mankind, for better or worse. some of us just don't like driving cars. some driving cars shouldn't drive cars if you have been on the road recently. maybe they'll do a better job. it's the future and going to happen. oliver: to step up to politics, you have been a target for donald trump on twitter. you have been cissy graydon carter, which is it and why, why were you a target? >> i have known him for a long time and at spy magazine which

i co-founded in the 1980's, we called him a short fingered bulgarian. i noticed during a story on him years before that he had very small hands. he would give him fits. he would write me notes and circle his hands. i was an early antagonist of him. i have more adjectives than most people. he is just sort of -- he stopped righting to me and about me about a year ago which is somewhat of a relief. emily: you wrote an editorial where you talked about your interactions with him over 30 years. why did you decide to take such a public distance? >> we -- stance? >> we did against the bush administration when they moved into iraq as well. donald trump isn't your average candidate. we didn't endorse anybody, never have. i had a closer look at him as a journalist than most other people had.

i wanted to write what i saw in this man. it just has not been a great year for politics and whether whatever happens in the election, i don't think he will get in, but it will leave a stain on the process. brad: another year of big change for the media business, how is the magazine doing and are the technologieses that are exciting? >> virtual reality and that's in the beginning staying, mostly for entertainment rather than news or nonfiction storytelling. "vanity fair" is very profitable right now. we have a very successful digital business. you embrace all of these things as they come on if they help you do what you do. i'm not into gimmicks or anything like that. if it helps our readers understand the story, i'll use it. if not, i won't. emily: trump has had some unkind words to say about "vanity fair," the media business in general. the media has become a part of

this election and been blamed for this, the way that this election has turned. do you think the media is to blame for the rise of donald trump and the way things have played out? >> i think the media has had a lot to his rise and giving him air time. not all opinions are worthwhile. someone says the earth is round or flat. shouldn't give equal time to the flat earth person. i don't want to offender any flat earth people out there, those aren't as much as the round earth people. he has been given a lot of air time because you can't keep your eyes off him. brad: do you think we'll see a trump news network after this election? >> i think he will find it harder to do than he thinks. 15 years ago, it might have been easier and i can't imagine a steady diet of this and obviously it would appeal to his outright base, but i don't -- i won't be watching it. emily: last question, this is the third year of the new

establishment summit. jeff will be here tomorrow. where do you see the new establishment going? we talked last year about a change from sort of media into tech. do you see that continuing? >> you know, when we first started at 20 odd years ago, most of the people on the list were from the entertainment business. and then a lot were in the information business and then technology over the last 10 years has come to dominate it. i haven't seen the people who create content will be the new kings in a certain way just because i have all of this technology. we got to tell people stories, otherwise they're not going to be interested. emily: graydon carter, editor of "vanity fair" as the new establishment summit kicks off in san francisco. great to have you on bloomberg. back to you. shannon: emily chang and brad stone in san francisco. oliver: a quick programming note. catch an encore airing of the david rubinstein show, peer to peer conversations tonight on bloomberg. he travels the country talking to lawyers to uncover their

stories and paths to success. the first features microsoft co-founder bill gates. >> what did your family say? did she say something was wrong because he wanted to do computers? >> they knew i was obsessed with computers. i would skip academics, i would leave the house when they prefer i wouldn't go work at night on these things. it was kind of considered a little strange. oliver: the first episode of this six-part series airs tonight at 8:00 p.m. eastern. do not miss it. this is bloomberg. ♪

scarlet: this is bloomberg markets. i'm oscar de la renta oscar de la renta. oliver: in brazil the man who spearheaded the ouster has been

arrested as part of a sprawling probe into a crums at a state run oil giant. he is accused of taking millions of dollars in bribes. he denies the accusations and he resigned as speaker of the lower house in july and stripped of his congressional seat in september. and credit swuste is shedding 20 jobs at its cash equities business. the cuts come to an area the bank had previously earmarked for growth. employees are among those affected. the new home construction in the u.s. saw prices fall last month. residential starts fell 9% in september. a huge drop in multi-family construction in apartments and townhomes down 38%. meanwhile building permits, a proxy for future construction rose more than 6%. and hackers who relentlessly pursued banks may run into tougher defenses. the federal reserve and other

regulators are said to issue a proposal today requiring the industry and outside firms who serve that industry to better safeguard itself and customers. banks with $50 million in assets to establish court approved protection to make them aware of what is happening in their own systems. that's your bloomberg business flash. >> an unexpected decline last week, oil creating well above $50 and now approaching $52. in commodity's close, we get preval from an energy trader who now runs his own firm. this is bloomberg. ♪ david: from bloomberg world

headquarters in new york, i am all over ren -- olive renick.

scarlet: i am scarlet fu. 2.5%: oil now up i over and it looks like closing above $51 per barrel. it got a lift early in the day after the saudi early -- oil ministry said they may be willing to sign onto to the oil production agreement and then got a bigger leg up after we got the weekly inventory data that showed a long -- a large drawdown. this is brought to us from bloomberg news from standard chartered. this looks at the inventories we have seen this year. the white line versus 2015. inventories are tightening faster than the market is predicting. an 18 month horizon to get back to normalization. we have seen the

inventories fall much more than they typically do on a seasonal basis. down more than 800 house and barrels. that is the drop that you see. rise, natural oil gas is pulling back. this is after warm weather in the northeast and the forecast for that is to continue. gas pulledn natural back sharply by about 5% as we have seen more wild weather. i want to talk about what has been going on in london. aluminum notable with a .6% pullback. a three-week low. we saw supplies in china climbing. this is down. on the flip side, other industrial metals higher. we are seeing a tightening of inventory.

zinc also higher on the day. >> crude stock piles told by a third most the sheer. six times in seven weeks. perspective into with jonathan goldman. we talk about the inventories here and what we are seeing. what jumped out to you that is particularly important taco >> this is really important for what we have seen where not just in the u.s., but across the globe inventories have been thenng more or building us seasonal patterns. it was happening in crude and seasonal products before that. we have seen pretty large drawdowns, including

inventories, as well. opec,ll the attention on we think the more interesting thing is what has been going on in the real-time data, which has been constructed for the market. scarlet: we have a chart that shows crude inventories tend to see a build at this time of year. we have seen this for the past couple of years. the yellow line is this year and proven to be the exception. fundamentally, what is happening this year that is different --what is happening this year that is different? >> imports have been dropping more. for most of this year, one reason crude oil inventories remained elevated is imports into the u.s. where at seasonal highs for most of the year. that has changed.

in part, because there were a number of inventory drawdowns in areas that are tougher to get good data on. as the inventories have been drawdown, we are finally star comparable inventory draws in places like the united states that has more readily available data. moreost recent data is instructive than what we saw over the summer. if you look at the trend since the beginning of the year, although inventories were at a high level to start the year, the trend has been fairly constructive. talking about where we stand with the pipeline disruptions. we know it has been part of the story for the past year or so. do these arise surrounding the

disruptions? this is the market we have with this. >> it is tough to know what will happen next in the oil market. this year we have seen a number key disruptions. a number of the pipelines were disrupted for several week. this has helped to draw down inventories, which is the pricing benchmark for the nymex gas pipeline. this has built up refinery pipeline. they will have a bigger incentive to run. >> you mentioned opec+. when i first announced they have agreed to a freeze, there was a that theepticism rhetoric with the to action

later on. where do you stand on that? we were skeptical as well, and we were surprised they came what they did. there is still a lot of work to be done. for cheating. there remains a problem in deciding how much crude opec is currently producing. there is a wide range of disagreements between secondary sources and primary sources about what production actually is. our view is the saudi's have dug themselves into much to allow this to completely fail. we do it wrecked something to come out of the meeting. as they going through the bond offering today, there is a clear need for higher prices.

when you combine that with a toket already starting perform in terms of inventory, it is a pretty powerful dynamic. looking at the commodity curve, i want to pull up what we are looking at now versus a month ago. besides the fact it is translating up a little .it, it looks lately less steep is there anything from a training perspective that stands out to you? >> we think the trend will continue. the difference between the front end of the curve and back and will be reduced. we think inventories will continue to draw down. importantly, u.s. producers are more efficient than they have been in the past. we have seen more hedging than we ever have in the past.

as prices rise or stay at a similar level, we think the back end of the curve there will be large amounts of producer selling which will make it even more dramatic. >> great stuff. chief investment officer and founder. scarlet: a check of your headlines at this hour. mark crumpton has more. mark: utility officials say an portland,at a popular oregon, shopping district occurred after construction crew hit a gas line. people were evacuated before the blast. to further and two civilians were injured. trump campaign manager says he needs a comeback in the final week of the campaign. speaking to fox news ahead of the third and final presidential debate. posting a predebate special. newcan watch it at 8:30

york time and live streams on twitter. the top house democrat says donald trump unfounded allegations that the elections are rigged our quote irresponsible. nancy pelosi told reporters challenging the integrity of the voting system in truth on sacred ground. british consumers are starting to feel the brexit fight. wages are rising of the weakest pace since early 2015 as oil prices and the weaker pound fuel inflation. pressure could and intensive i. american of adults support legalization of marijuana according to a new gallup told. when first of -- first asked about the issue in 1969, 12% supported legalization. recreational use of marijuana is legal in four states and on the more. this year and five

>> global news, 24 hours a day powered by more than 2600 journalists and analysts in over .20 countries this is bloomberg. back to you. scarlet: coming up, we will hear from longtime asian investor richard bloom on long-term investments in china. this is bloomberg. ♪

scarlet: this is bloomberg markets. i am scarlet fu. the economy showing signs of stabilization. gdp figures held steady while retail sales rose 6.7%.

david westin sat down with richard bloom, chairman and founder of blum capital. author of the accident of geography and has a long history of making deals in china. >> the secret to investing in china as to find the right partner, people you can trust. a partner. we started new bridge capital. calledted something pacific alliance that sean is running. he is the guy who was making fore bricks in the desert 20 months or longer. came back. never really went to high school but got a phd from berkeley and joined us.

to give you an idea of how smart he is, every time i see janet yellen, she says how is sean? returns have been very good. we had a simple bet. still the same. been in the middle class. a lot of it had to do taking all banks and turning them into consumer banks. this was 1999. the development bank. we brought in frank newman who had been deputy treasury secretary, run microsoft, and we had him on the board, and we said we need someone to run the bank. it was a time where assets ,hrough rapidly -- grew rapidly

and we turned the bank not just into a consumer bank but a financial services organization. >> how frustrating is it to know what the rule of law is? >> the rules of law are getting .etter, but they are arbitrary people steal from you, and it does happen. you have to be willing to take it on. we actually sued the chinese government at one time. it worked out very well, because regulators in beijing thought we were right in the lawsuit we had and it came out on our side. the banking system is different in the sense that if the banking regulator tells you to do something here, you do it.

over there, maybe yes, maybe no. >> a lot of your work now is philanthropic work. including in asia. what did you learn from your success of private investment when -- then informs what you do in philanthropy? >> we are not traders. if we get in and out some investment in three years, that is a trade. i was chairman with richard ellis for 12 years. i was talk about private equity guys downsizing employees. there was 10,000 employees and one billion in sales. so it is a win-win. we've done in asia as well. mainly in nepal.

it is hard to get things done in tibet because the chinese government does not want us there. toy will not let me go quebec. i am an old friend of the dalai lama's and never have been bashful about telling the chinese leadership that i feel that way. most people in the western world will not on the issue of the dalai lama because it strikes a red court. >> you say most of the action over there is in nepal. how did you get so involved and why are you so decades -- dedicated? >> when i was seven or eight years old i read all the richard halliburton's books. climbed theary mountain in 1953.

part of the foundation today for 20 years ago -- for 20 years. peter hillary is also on the board. they're carrying on their father's work. when it hillary first climbed me andntain, he came to said they need education. they started the schools their 50 years ago. very easy people to work with. so that has been a success. we have helped tibetan refugees. have first world medicine .ospital for disabled children maybe 2000 serious surgeries a

year. that has done well. the biggest program today is something i would not have known about until 15 years ago. saving young girls from being sold into prostitution. schools, girls in school, you would do something about the problem. or how bad you think the life is for the girls who were taken across theacross the border, wee corrupt officials going along that however if i do think it is worse. >> richard bloom. chairman and founder of blum capital. scarlet: a look at some of the biggest business stories in the news right now. the short seller says st. jude's acres and a 50 liters can be turned against the patient. they have released a technical video that covers what it causes -- called the vulnerability.

they said they stand for high-end security of its devices. starbucks pushing ahead with its franchise expansion in china. starbucks has about 13,000 the newn the u.s. and york times has named the deputy publisher, positioning him to take the reins of his father, chairman and publisher arthur helzberg her junior. he would be the fifth generation of his family to serve as .ublisher that is the bloomberg business flash. to anyone tell us what expect in the third and final presidential debate tonight echo the latest matchup and surmise what the fireworks could be. this is bloomberg. ♪

scarlet: this is bloomberg markets. i am scarlet fu. of it could be another night fireworks in u.s. politics as hillary clinton and donald trump debate each other in the third and final residential debate. this comes at a time when hillary clinton has been gaining ground among voters. the national polls as mrs. clinton of by nine points. , the crew spoke to pimco executive vice president and head of pulp -- public policy. there are a lot of polls going in clinton's direction. on average, she is up by six or seven points. that is the real politics. i think most importantly, the polling in key swing states. it is very difficult for donald trump to get to that needed to

enter 70 votes without winning crucial key states. >> we're putting up the barcode. ohio, for carolina, florida, and pennsylvania. there are some polls that show it is much closer in ohio. this is a little bit dated, this isctionally important. he basically needs to win florida and order to get to the -- 270 lift world votes. >> normally if you had two other candidates in this situation, you would have donald trump candidate focusing on pennsylvania, florida, ohio. is that his approach here? campaign has been very unconventional to say the least. we expect in the coming 20 days he will just be focused on these four states because he has to

win them in order to get to the campaign has been very unconventional to say the least. needed 270. >> one thing he is doing is questioning the polls. whether the media is biased and the polls. what is the likelihood. we have seen the polls be wrong before. obviously is a recent analog. basically tied the night before but had the big undecided .ortion, the 10% now we have 16% of the electorate either undecided or supporting a third-party candidate. that is definitely volatile, and makes tonight quite important. back, there have been no presidential candidate that has come back from the above deficits that have faces. still seems an uphill battle but at this point is an impossible.

>> and to go back to history it is hard to find one. >> unprecedented campaign all around. >> what are the ramifications potentially for the house and the senate? >> that is the focus among congressional republicans and senate republicans, maintaining the majority there. the senate looks easier to call in that it will likely go the way of the white house. they will not have a filibuster proof and gauche -- filibuster proof geordie. --majority. >> we have much more ahead. this is bloomberg. ♪

oliver: it is 3:00 p.m. in new york, 12:00 p.m. in san francisco, 8:00 p.m. in london. i am oliver renick. scarlet: i am scarlet fu. welcome to "bloomberg markets."

fromet: we are live bloomberg world headquarters in new york for the next hour to we are covering stories from san francisco, las vegas, china, and brazil. banks continue to report third-quarter results. we will speak to the ceo of bb&t. the bank plans on expanding its footprint. tech giant apple wants to get even closer to its customers as iphone sales lag. the company is teaming up with a handful of outside companies to build new smart products for the home. we will ask steve jobs' biographer walter isaacson if this is what steve jobs would have done. the countdown to the final presidential debate what to expect from hillary clinton and donald trump. we are one hour from the close of trading. julie hyman is here and with the rise in oil prices, stocks are

getting elected julie -- getting a lift. ofie: oil is sort overwhelming it and causing stock to rise to some degree. not a huge game, but it is the second straight daily gain. traded in ag stocks very tight range after a bit of a leg up after the oil prices jump. here is the breakdown. energy shares are clearly the leaders here, getting that lift from oil prices and from earnings. financials also helping to lead the pack with a lot of the regional banks that scarlet mentioned rising today and helping to lift that group overall, and material stocks are also gaining. defensive groups not doing as well today. let's look at the oil prices because it is such a remarkable jump we saw come a leg up on the , showing an unexpected drawdown that was quite large. this continuing trend of falling inventories in the u.s. sending oil prices better than 2%.

highest since july of last year with $51 a barrel. in addition to that we have halliburton out with earnings. analysts were projected and lost, and instead the company reported again, and the first sales gain in north america are going back to the oil downturn of 2014. the company had predicted it was seeing a bottom, and it looks like that is bearing fruit. morgan stanley out with fixed income, revenue that was much more than estimated, leading to an overall profit jump. those shares have gained on the day. up half ahey were only percent. intel is coming out with a forecast that was below what analysts had been anticipating. added last reporting weaker than estimated earnings because of the value of its state in mylan. the largest shareholder there. and the seagate, that compan

y's earnings beat estimates quarter over quarter, much like intel, server sales in the enterprise sector were week. between intel and seagate, we're seeing a ripple effect in technology today, particularly when you look at semiconductor and hard disk drive makers. oliver: i was looking at intel's move, second-worst in about three years. julie hyman, thank you so much. great of a let's look at the headlines pick mark crumpton is in our newsroom. donald trump is going to win the white house, he will need an historic comeback to do it, according to the bloomberg politics national poll. ae survey was taken after leaked video from 2005 prompted a series of women to come forward saying trump had made unwanted sexual advances. trump denies the charges. his support among men has gotten weaker.

meanwhile, the third and final presidential debate takes place tonight in las vegas. moderator chris wallace of fox news will focus on topics including immigration, the economy, and the supreme court. he will also ask questions on a topic almost certain to result in fireworks, fitness to be president. mark all due respect's" halperin and john heilemann will host a predebate special on bloomberg television. an civiliansd have been injured falling i2 guess extortion that rocked a popular portland, oregon neighborhood. the blast occurred after a construction crew hit a line. people inside the building were evacuated before the explosion. the president of the international olympic midi wants to state events for the 2020 -- olympic committee wants to stage events for the 2020 of the mix in tokyo, japan, a region kick by the earthquake and tsunami and nuclear disaster.

the proposal was made in a meeting with japanese prime minister shinzo abe. saysuropean space agency its experimental progress after the atmosphere of mars. officials say the signal from the craft was lost before confirmation it had landed, and that it is not "a good sign." running a spacecraft on mars is notoriously difficult and several past missions have failed. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is a bloomberg. scarlet: shares of bb&t rising by the most in about 10 weeks after the bank reported profits and sales that topped analyst estimates last quarter. bb&t is starting to see pay off as it expand its footprint in the southeast and mid-atlantic, including its entry into pennsylvania.

joining us now from the bank headquarters in winston-salem, north carolina, is kelly king, chairman and ceo of bb&t. thank you so much for joining us today, kelly. kelly: glad to be with you. scarlet: the bank reported a record profit but when you look at growth, 0% sequentially from the second quarter. that disappointed some analysts. q what do you attribute that lack of growth -- to what do you attribute that lack of growth? kelly: well, it was actually 0.3, but not much. one of the factors is that we have a fairly large commercial and industrial portfolio, and we saw a lot of unusual, very large payoffs this quarter, which are basically because of large expecting rates to rise, so they went out and financed in the public market on a long-term basis so they could get the loans locked in before

the race rise. that was an unusual drain on long growth during that time. frankly, a lot of people today are anxious about the upcoming election. i saw a report from earlier this week that 52, 53 percent of all markets are very, very anxious and concerned about the election. i believe that cost a lot of business people to be reticent to borrow at this time. they are a little bit distracted. i think the combination of those had an effect. and generally, ti growth today is relatively slow because of the uncertainty in the environment. you talk to small business people, medium-sized business people around the country, they are very hesitant to grow now on anything other than a passive basis because of concerns about taxes, regulation, uncertainty. this is a continuation of the same.

a little different because of the large payouts we had this quarter. oliver: kelly, you mentioned this reticence by the u.s. consumer to go out and take loans, take risks. we have got bank earnings the past week, we've seen a lot of -- although a pickup this quarter in trading, there have been questions about how larger banks are going to continue to make money off some of their main profit streams in history. i wonder, from your perspective and bb&t, what is the most among all these topics that people are talking about within the financial industry right now? kelly: two distinct trust between some of the large new york banks, they have a large percentage of their income from large-scale trading of deaths andsecurities -- debts securities. when rates are moving a lot, you see a lot of of volatility and

training in those markets. their income is way up in one quarter, way down in another quarter. we are more a reflection of what is going on on main street, if you will. and so i think that the large volatility that the largest banks -- with the largest banks will continue. and that makes it challenging for them. but for us we are seeing relatively stable growth come with the exception of what i just mentioned with regard to this quarter. i think as we go forward, you will see growth that will be commencement with gdp growth -- commencement with judy -- commen surate with gdp growth. i expected to be constant over the next 2.5 quarters. that will allow growth in the area commensurate with that. we generally think that our loans can grow a little bit more because of the fact that we have good presence in

all of our markets, a very good value proposition. we don't, friendly, try to outstrip the gdp by two much because if you do you are either pricing to cheaply or taking too much risk. scarlet: good point. i want to ask you about wells fargo and get your take their pick it has been under fire for the opening of the unauthorized accounts. since then we have heard from several large banks, including jpmorgan, u.s. bancorp, that there undertaking reviews of their own sales practices to make sure they don't have similar problems. what are you doing at bb&t to make sure this is not happening at your firm? kelly: when we heard about that we thought it was prudent to do an in-depth analysis of practices and we have been going through that the last several weeks, and what we have confirmed is exactly what was expected after being here for 44 euros, that we are absolutely focused on helping our clients achieve economic success and financial security. we do that from a consulted the

basis.- consultative i do not believe in selling. i believe in working hard to help our clients understand their needs, being diligent about explaining our products and services to them, and then if they have a service, they buy. don't have to sell anything good a simple doctor analogy -- if you went to your boxer with a headache -- doctor with a headache and he said here is a couple aspirin but did not check your blood pressure to see if you have a heart problem, that would be medical malpractice. we did not help them understand their needs, that would be financial malpractice. helping to understand needs and services is a long come a long way from high-pressure selling from which bb&t does not do. oliver: got it could kelly, i want to switch the dynamic and talk about this conversation in terms of capital requirements and the fed's language about

what they will be asking regional banks going forward. what has been the takeaway of some of the language of the fed officials and do you see the landscape changing for you favorably as a result of the conversations? kelly: it is actually kind of favorable for us because it is more clarified. the last two or three years has been uncertainty about the capital requirements. noticeswith the recent they have sent out an recent speeches by the governor it gives me a great deal of confidence -- about $225 firmon, a pretty good feel on what our common equity capital requirements are, basically about 7%. we run about 10% now so we are comfortably above that. i do not see practical expectations that would change our capital requirements on the

upside. in fact, there may be some opportunity to lower capital requirement. good news for us. not quite good news for the largest institutions. but i will let them worry about that. scarlet: all right, let's leave it there. bb&t chairman and ceo kelly king, thank you for speaking with us today. we have breaking news out of the middle east. qatar is considering investing in a $100 billion global technology fund found by softbank of japan and saudi arabia, according to bloomberg reporting, which is sex people familiar with the matter who declined to be named. we are learning it -- which cites people familiar with the matter who declined to be named. this is not limited to saudi arabia. qatar putting more money into a tech unfounded by softbank and saudi arabia. this is bloomberg. ♪

scarlet: this is "bloomberg markets." i am scarlet fu. oliver: and i am oliver renick. what with steve jobs think about apple's plans to push and the smart home, or the automotive plan? let's find out by joining emily chang and brad stone in san francisco. hi, guys. we are here with walter isaacson, ceo of the aspen institute and the author of many, many, many books. you will be on stage with jeff bezos. alexa. i will be like we will try to have an artificial intelligence interview with him. emily: you are speaking today about when bad things happen to good ideas. let's start there.

what are examples? walter: i'll give you an example. bezos top of the list. number one. menu use ago, steve case, top of the list, number one. bad things happen. aol-time warner merger. and years later he wasn't even on the list. emily: you are not going to rub it in. [laughter] had stocky, i options in the old time inc. i deserve to rub it in a little bit. longevity on the list might be more secure. walter: it's interesting, you study it everyday. what makes a company survive? twitter five years from now, will it be huge? those are the topics we will tackle of the conference, what makes something sustainable. and my view of it, and we talked

about apple before, too, is if you can make what you are doing a platform upon which other people can build the -- if i pull out my iphone and we look airbnbs andbers and maps built on it, that gives you sustainability. whereas if you are not a platform and twitter has not yet become a platform that other people build services on, that makes you less sustainable. as frames onto my totally convinced they are sustainable -- as for amazon, i'm totally convinced they are sustainable. emily: let's talk about apple. what is the difference between the company today and the company you wrote about with the doom mongers? i wrote -- walter: i wrote about apple in an historical way and i don't have or pretend to be an ongoing expert about what is happening with apple now. i do know that steve was able come every five or six years, to

say let me be disruptive. for example, he looked at the ipod, which was just huge. somebody thought that they were going to build something that put 1000 songs in my pocket and it was innovative and brilliant, but after that what does he do? it is going to destroy us, destroy the iphone. he put songs -- destroy the ipod. he puts on sun a phone, with the iphone. i can't be a next her and what apple has coming out next. -- expert on what apple has coming up next. they need to keep that we have invented something wholly new spirit. brad: we reported that apple was struggling to formulate a vision for the automobile and have adjusted their strategy someone. does that speak to a relative vision problem with the company today? i talked to steve in 2011 when he was stepping down

from apple and he had a vision for a lot of things. one was to be in the textbook industry. i don't think people remember that for my book. he said, let's totally disrupt textbooks. he hired a great biologist to do a biology text. he wanted, as you know, to get into the television business so i can go into my house and say, hey tv, put on the debate, or hey tv, put on bloomberg news or whatever you wanted. he also wanted to disrupt automobiles, i think, photography. he had visions of what to disrupt it i think nowadays, one of the big fights, and jeff bezos is part of it, apple is part of it, is artificial intelligence and machine learning, whether it helps you drive a car, answer the questions you want. i noticed that apple has gotten more into the artificial intelligence world with some purchases. but i'm very impressed with what google and amazon are doing with machine learning and artificial

intelligence. emily: anything else steve jobs told you? any other product plans that have not come to fruition yet? pretty carefulas in the book to say, all right, we have had these interesting discussions, but i don't want to preclude apple from being able to innovate. there are things i just didn't put it because i felt it was almost like it would compromise the company, even though steve had told me -- i think i have to stick to that, which is i talked about it in general, but i don't want to reveal the product plans he told me. you are lucky, because we have some breaking news. walter: good, what is it? emily: we have to throw it back to new york. oliver, you got it. oliver: thank you, emily chang and brad stone. scarlet: we have news on the saudi arabia bond sale. the kingdom has now priced the bonds and we have details on it.

there is a five-your component ,omprised of 135 basis points for the 10-year offering, 100s the five basis points above treasuries. for the 30-year, 210 basis points above the treasury. in terms of a coupon for the carry it, 2.37 5% -- on the 30-year, 4.5%. this is bloomberg. ♪

julie: welcome back. i am julie hyman. insight." e "options our guest is looking ahead to

yet another earnings report, in the thick of it now, american express. about 4%, being priced into the option. what is your place here? -- what is your play here? annexes on uneven footing because of the loss of the cost of exclusivity. >> it certainly is, centrifuge laggard as well. i really like the downside. it is like a sick baby. it can get better but it is jaundiced. i really like find next week -- 60-58 put spreads. i can do that for less than $.50 here. $2.50 the move of about -- if we get the move of $2.50 get itsf i can

sub-$.50, the maximum i could ever lose your, but i really see some big headwinds. the loss of costco. payment processes that consumers can go to now, and i think amex is in for a rough right here. julie: what is the risk of the upside surprise? just quickly, scott. >> i think it is real limited. any sort of good metrics, there is really a lot of downside pressure. from fundamentally and the technical standpoint, very limited to the upside. julie: all right, we will get those headlines in a little bit. great to talk with you. we will be watching for those numbers after the close of turning. this is bloomberg. ♪

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